I used to edit Innovation Management. My book, "The Elastic Enterprise", co-authored with Nick Vitalari and described as a must read for companies that want to succeed in the new era of business - looks at how stellar companies have gone beyond innovation to a new form of wealth creation. I speak on new innovation paradigms.
I started my writing career in broadcasting and then got involved in the EU's attempt to create an ARPA-type unit, where I managed downstream satellite application pilots, at just the time commercial satellite services entered the market. I also wrote policy, pre the Web, on broadband applications, 3G (before it was invented), and Wired Cities.
I have written for many major outlets like the Wall St Journal, Times, HBR, and GigaOm, as well as producing TV for the BBC, Channel 4 and RTE. I am a research fellow at the Center For Digital Transformation at UC Irvine, where I am also an advisory board member, advisory board member at Crowdsourcing.org and Fellow of the Society for New Communications Research.
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Apple's Share Price: Did The News Worm Start To Turn?

A couple of weeks ago I wrote that Apple’s future was now being framed in much less flattering terms than it has been over the past five years. I contrasted Eric Jackson’s view (Apple to go to $1650) with Edward A. Zabitsky’s, quoted in the Sunday Telegraph (Apple to drop to $270). Zabitsky’s was one of the first times in the iPhone/iPad era that we’ve seen serious reservations expressed about Apple’s business. The process of negative reporting is picking up momentum, even though Apple’s stock has reversed some of its losses.

Business Insider yesterday quoted NYU finance professor Aswath Damodaran as having dumped all of his Apple stock. Damodaran said as much in a Bloomberg interview. “I sold because I’m very uncomfortable with the other people who are holding Apple shares right now. The new investors of Apple scare me. They’re momentum investors. They’ve shifted the game. Once stocks become a momentum play, intrinsic value goes out the window.”

Here on Forbes, Todd Ganos speculates: “We warned about Apple a couple weeks ago. The question is: will what happened to gold also happen to Apple? If yes, it would mean a return to $400 per share.” While Nigam Arora had this to say: “The real reason for the swoon is that the stock is over-owned, sentiment is too bullish, and there are jitters over upcoming earnings.” Meanwhile, the Boston Globe reports, it was analyst Walter Piecyk, moving from buy to hold that broke Apple’s run. Piecyk worried about carriers ending their subsidies of iPhones. And here about the risk to Apple’s business model.

Two weeks ago I wrote about the information economy around technology and particularly around Apple:

“It has for the most part been supportive of Apple. In 2008/2009 I watched as the information infrastructure in mobile, at that time dominated by TechCrunch and GigaOm, utterly decimated Nokia’s reputation and its executives’ confidence.

There seemed to be no way Nokia could repair the damage, whatever time or consideration it asked for. Its hugely successful global footprint was totally ignored as its performance in the U.S. market became the only benchmark.”

Of course Apple is a long way off becoming a Nokia. The point I want to draw attention to, though, is that we have a new information infrastructure and its effects give reputation a whole new momentum.

Apple has been a major beneficiary of this new phenomenon around popularity. If you can win popularity, you rise above the noise and become even more popular. Recent studies have shown the best way to get an audience is to write about what other people write about. So in effect if you are a producer in the information market, you tend to write about what people are reading. You flock to hot topics.

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If you use Apple products, you know that in the past 6 months the quality has slipped quite a bit. I’m not talking about hot iPads or grips of death. I am talking about stability of the products. For example, if you use AirPlay to play music to your Apple TV, the new updates have it crashing quite a bit. It never happened before these new updates of a few months ago. I find myself closing apps and rebooting my iPhone or iPad to get things like Hulu or TuneIn to work properly. TuneIn worked just fine until these new updates. Indeed, iOS 5.1 seems to have introduced new bugs.

Then there are things that were always bad. Safari on the Mac is an awful web browser. I can’t even do my online banking because a bug in Safari causes it to drop sessions. On Firefox, it just works. This is concerning because Apple developed WebKit (now open source) which is the foundation for all browsers, yet they make the worst browser on the planet. Lots of sites are formatted poorly. Trying to access menus, on say Hulu, doesn’t work, as they slide back up before I have a chance to click on a menu item. I don’t think this is Hulu’s fault. When I use FireFox, it just works. Sites look like they should on Firefox.

Mobile Safari is also very bad. Beyond the lack of Flash, you cannot upload files with the html file upload form field. Even with the lack of access to the directory structure, you’d at least expect to be able to upload from the camera roll. Mobile Safari is so buggy, I cannot even watch the new iPad video on the Apple site, with my iPad 2! It shows a line through the play button, and it just doesn’t work. Reading up on this, others have had to re-install iOS to fix this. Rebooting and reinstalling? It doesn’t just work. It just sucks! I have never had a problem playing a video on any other site! Just Apple’s site, with their own iPad 2! They are not good with internet technology.

iTunes has crashed on me a few times recently, and it never did that in the many years I have used it. I have had loads of issues with iTunes in the cloud and some songs never downloading on certain devices, no matter how many times I retry.

Now there is yet another issue with malware, a new trojan horse, in OS X. Indeed, it is a fact that OS X has less vulnerabilities than other operating systems (look at Wikipedia’s article on Operating System Security). However, Apple has become sloppy and hackers are targeting Macs now.

The iBooks scandal is perhaps the worst thing of late. iBooks were so expensive, I never bought one. I downloaded the Kindle app and bought Kindle books. Now I know why iBooks are so expensive. Many Apple customers went with Apple, because there was a sense that the company did right by the customer. Now it is clear, if they have a monopoly, they will gouge consumers. There are rumors they want to buy Netflix and Hulu, and if this happens, kiss cheap content goodbye. I personally don’t like downloading video content from iTunes because it takes a very long time! Indeed, iCloud is slow, and Apple’s ineptitude with all things internet is showing.

I could go on and on. The point is, Apple’s quality has gone down hill very recently, within the past 6 months. You pay a premium price to buy Apple products, and for that, you expect top quality. The claim is that “it just works”. As an Apple customer for 7 years, I am now considering going back to Windows, and maybe even getting a Droid or Windows phone. We’ll see. I always think you should buy the best technology you can afford at the time of purchase. I still think the iPhone is the best smart phone, but as Apple’s quality declines and brands like Samsung get better, it may change. I am not a fanboy. I am always open to switching brands when the time comes. These are all evil, greedy companies. Even Google. Being loyal to a company is not rational consumer behavior. These people with Apple tatoos, stickers on their cars, or Apple’s logo shaved into their head are going to have egg on their face…

Indeed, most new Apple customers are not fanatics that had the PowerMac 9600 back in the 90s. They bought an iPod or iPhone, and some liked it so much, they bought Macs. These are not loyal customers. If they see what I see, and act rationally, Apple may lose customers if they can no longer deliver quality.

A lot of the loyal customers now dislike Apple, as they have catered to the whims of the masses. System wide Twitter integration, anyone?

Thanks. I am working on a WordPress blog, “appledystopia” that covers this in more depth. I feel kind of betrayed by Apple. I bought about $5000 worth of Apple gear over the past 3 years, and it was utopia. Now, with the recent releases, it is dystopia. The nice thing about Intel based Macs is you can always install Windows on them! I still think their hardware is great. Something as simple as a wifi router is even done better by Apple. The AirportExtreme is great (but also 2-3 times as expensive as any other wifi router).

The iBooks scandal really ticks me off. I decided to try to avoid buying content from Apple. I can buy books, music and video from Amazon. Amazon even has a music downloader app for the Mac that puts music into iTunes. I know this will not put a dent in their business, but I can’t support a company that colludes and conspires against the customer. Now I see, if they have a monopoly, they will gouge consumers.

I got a Mac because, as a software engineer, most java developers were moving to Macs (most java solutions are deployed on Linux, and OS X has a similar POSIX environment). Now I am working with Ruby on Rails, which is also better on POSIX systems. That said, I could always dual boot Windows and Ubuntu.

It is live now, but a work in progress. Yes, I will write more about the iBooks scandal, but I only know as much as the media does. I will write a position piece on why Apple users should seek content elsewhere, even at the expense of slight inconveniences (buying music from Amazon doesn’t integrate into iTunes in the Cloud as well, but it is close enough). Buying Kindle books is a no brainer. The same book on iBooks costs at least twice as much — the same price as the physical book.

http://appledystopia.wordpress.com/

I just started the blog a few days ago. I intend to write more today. The first thing I want to focus on is how tablets are a fad, and I fell for it and bought an iPad 2. I should have just got a laptop… They do so much more. My desire to have a home entertainment system, based on an iPad 2 and Apple TV 2 was a big mistake. The media apps, like Hulu and Netflix are watered down versions of their computer based products. That, and having to close all my apps, restart my iPad, and restart my Apple TV… Meh, it’s bleeding edge crap. A laptop can do much more, costs the same or less. Who is too enfeebled to carry around the extra 2 pounds? Even the basics, like playing music from my iPad 2 to Apple TV (then through my stereo) are now buggy. It sucks when you buy something that works, and the company that claims “it just works” ends up breaking it. Most times, I just listen to my Sony HD radio, as this Apple experience is frustrating.

Please check out my blog and I will be adding to it all the time. I am not an Apple hater. My hope is that Apple takes notice and gets back to placing quality ahead of gimmicks. I will be fair. If the quality improves, I will say so. Like it or not, I am stuck with this Apple ecosystem, for now…

I will do as much as I can. I am also busy working on an entreprenuerial web portal using Ruby on Rails. I think I have a little more insight than a lot of bloggers, as I am technical and have used Windows, Mac OS X and Linux. I worked as an enterprise java developer at a Fortune 20 company for the past 10 years and before that, at a well known software company, whose product you probably use every year, around this time…

Ubuntu is scary good these days… Sometimes I regret getting a Mac and wish I did a dual boot system of Ubuntu and Win 7. I guess the nice thing about a Mac is you can dual boot Windows… Maybe Ubuntu, some claim it doesn’t work as well. Apple hardware is top notch. Jon Ives and Bob Mansfield are the rock stars. OS X is getting lame. iOS is probably their least reliable platform…

i guess some folks will find some problems with the largest market cap company in the world. i feel fortunate that we have the media and experts to tell us whats wrong and whats right and how their usage of apple products was bad. i just feel stupid investing in a company that has gone from zero to over a half a billion dollar market cap. sounds like a whole bunch of dumb, unsatisfied customers that have brought apple to this level. i feel duped.

In his book The Black Swan, Nassim Taleb talked about what you mention: the herd behavior of news. Certain topics are over-covered and other topics are under-covered.

We know that financial asset returns follow a Pareto-Levy distribution. I would guess that analyst estimates follow a similar distribution. Rob Arnott authored journal articles in the late 1980s and early 1990s that suggested herd behavior of analysts’ earnings estimates. Although I never specifically explored this concept deeper, I believe it is the case.

We can see very simple mechanisms causing it in news Todd – to grow an audience over the short term you need to write about what other people are writing about. Amazingly it seems to work with opinion too – it’s not just writing about the same things but also having the same opinion,

As a follow-up note, some people will love (fill in the name of any given company) and some people will hate (the same name). In this case, the name is Apple.

Anytime there is an article about (fill in the name of any given company), you will see the lovers and the haters come out of the woodwork. Their passion — in whichever direction — will bring out all sorts of comments. In some cases, it spawns a gripe session.

In my article (http://blogs.forbes.com/toddganos), I am not advocating love or hate for Apple. I am merely pointing out what technical analysts will tell you: emotions will drive a stock’s price away from what the fundamentals suggest.

As a matter of disclosure, our firm does NOT have a short position in Apple and none of our firm’s clients have short positions in Apple. So, our suggestion of Apple moving lower is not a matter of “talking our book”.